Market update | May 29th, 2026

Equities celebrate, bonds warn – Bitcoin bets on the interest-rate reality

Equity markets remain buoyant, propelled by the AI-driven rally. Meanwhile, bond markets are increasingly focused on geopolitical tensions and the prolonged blockade of the Strait of Hormuz. The longer the disruption persists, the more inflationary pressures are likely to build through higher oil prices and shortages of key raw materials such as helium. As a result, market expectations are shifting away from rate cuts toward the possibility of renewed rate hikes. Against this backdrop, the 30-day moving correlation between the S&P 500 and the US 2-year yield has fallen to extremely low levels. Historically, such divergences rarely persist for long, and risky assets like Bitcoin are beginning to price in the view that rates markets may ultimately prove correct.

Interestingly, however, Bitcoin’s early May rally appears to have been driven primarily by strong inflows into ETFs and continued buying from Digital Asset Treasuries, while activity in the derivatives market remained relatively subdued. In recent days, ETF flows have turned negative, but funding rates on perpetual futures have meaningfully increased. This suggests that market activity is picking up again after several months of subdued trading conditions.